Avoiding Defamation Claims

The following are examples of the types of statements that you should avoid making in giving employment references:

Accusations. Accusations that an employee engaged in illegal or improper conduct frequently form the basis for defamation lawsuits. Employers have been liable for defamation for making statements to the effect that a former employee was a thief, used illegal drugs, or made "improper" advances to women. If you fired an employee because you suspected that the employee engaged in illegal or improper conduct and you feel compelled to state the reason for the firing, then restrict the statement to your suspicion ("Employee was fired because he was suspected of taking company property," not "Employee was fired because he stole company property"). However, don't even state a suspicion unless you can support it with objective evidence.

Exaggerations. Employers can also get into trouble by exaggerating an employee's misconduct. For example, a statement that employees were fired for "gross insubordination" was defamatory when the employees' only alleged misconduct was their refusal to adjust their expense accounts.

Statements not made in good faith. The general protection extended to employers giving employment references requires that the statements be made in good faith. An employer's statements are not made in good faith if the employer knows they are untrue or if the employer makes no effort to determine if they are untrue. For example, an employer who lied in stating that an employee had admitted falsifying expense records was liable for defamation. Similarly liable was an employer whose manager made negative statements about an employee's work performance solely on the basis of rumors. The manager had never supervised, worked with, or evaluated the employee and misrepresented to the prospective employer that he had actually worked with the employee.

Statements made to improper parties. The general protection extended to employers giving employment references also requires that the statements be made only to persons having a legitimate business interest in the information disclosed. For example, you can probably tell an inquiring employer that an employee was fired because the employee was suspected of stealing business property, provided there are objective facts to support your suspicion. In contrast, expressing your suspicion to others, such as other employees or friends who have no real reasons for knowing the specific details why the employee was fired, may be defamatory.

Guarding Against Defamatory Statements

When giving employment references, you can reduce your risk of being sued for defamation if you keep in mind the following key points:

Be truthful. If your statements are true, they are not defamatory. For this reason, refrain from making any statements that you are not prepared to back up and substantiate if you are sued. Give objective facts or opinions and conclusions that you can support with objective facts, rather than mere allegations, speculation, or gossip. For example, you can safely state that an employee was fired for missing too many days of work. However, once you start providing unsubstantiated opinions on reasons for the absenteeism, such as that the employee was drinking too much or was into illegal drugs, you increase your risk of being sued.

Be clear and unambiguous. Keep in mind that statements that are technically true may still be defamatory if they are incomplete or misleading. For example, an employer stated that an employee was fired for drug use but neglected to state that the employee's refusal to hire a supervisor's relative also contributed to the firing decision. The incomplete statement was defamatory because it unduly emphasized the employee's improper conduct. If you should decide to discuss why an employee left your business, state the reasons in objective and specific terms. Refrain from stating that an employee was terminated "for cause," "insubordination," "unsatisfactory performance," or other nonspecific reason, because such phrases may be defamatory by implication.